みなと国際会計事務所 Accounting Intelligence blog by a CPA in Tokyo

みなと国際会計事務所 Accounting Intelligence blog by a CPA in Tokyo, tax tips, accounting, running business

Japanese qualified stock options

time 2017/07/03

With stock options being qualified, the gains will be taxed as capital gain (flat 20.42%) and it will be taxed only at the sales of the shares (as opposed to being tax at the exercise on the gain as salary income which is taxed with progressive tax rate).

Qualified stock option has to meet the following conditions:

1) Person to be vested are employee, director or executive director, not owning more than 1/3 of its shares,
2) Stock option has to be exercised after two years and within 10 years from the vesting date,
3) Strike price in total has to be within 12,000,000 yen per person,
4) Strike price has to be higher than the fair value at the time of vesting, and has to be granted for free,
5) Stock options cannot be transferable,
6) Once the stock are issued, it has to be managed by a qualified financial institutions, and
7) It has to be reported to the tax office by Jan. 31st of the next year (Shiharai chosho).

Please note that auditors or external consultants are not eligible for qualified stock option.